HERE IS HOW YOU CAN PROFIT! Landlords Will Lose Billions
Over the last five years, many landlords have been in a purchasing frenzy, trying to quickly build their apartment property empires fueled by easy-to- obtain debt, high rents, and low interest rates. You may recall that recently in the residential real estate market, we were faced with small amounts of home inventory and low interest rates. This created a huge sellers’ market where sellers were not only receiving multiple offers on their homes, but they could sell their homes within hours of putting them up for sale, with many sale prices ending up much more than the asking price. This same set of circumstances, though not widely known, occurred in the multifamily real estate market at the same time as well. Tight inventory for sale and low interest rates fueled a few years of record prices being paid for the many multifamily properties. These circumstances would have all been good for the multifamily investor, except starting a little over a year ago, not only did interest rates increase dramatically, but landlords also saw rents fall. The problem? Landlords did not see this coming. Many landlords purchased these apartment communities at record prices, counting on continued low interest rates, low loan payments, and continued rent increases.
The compound effect of interest rates doubling over the last year and rents falling as much as 15% in some markets means that many landlords are facing loan payments now twice the amount they had just a little over a year ago and, in addition, less income from their properties from falling rents. The result? Landlords will lose billions. Many landlords will now be forced to sell at a discounted price, thereby taking an investment loss, or they will have to hand the keys to their properties over to their lenders and go through the foreclosure process. I predict that over the next three years, we will see billions of dollars in multifamily properties going through foreclosure, more than ever since the savings and loan crisis of the 1980s. SO WHAT SHOULD INVESTORS LIKE YOU DO? HOW DOES THIS HELP YOU? Start lining up with sources that can provide you access to discounted multifamily purchase opportunities because they are coming. There will be opportunities for smart investors to buy and own multifamily properties for pennies on the dollar. Of course, some properties will be fixer-upper candidates. However, there will be many coming available that are well-located and do not need extensive rehabilitation. Those are the kinds of properties you want access to. WHERE DO YOU START? Most cities have local landlord associations, multifamily investor meet-ups, or local multifamily investment groups created for networking, so look into getting involved in these groups and attending some of their meetings. The most important thing is to get on their mailing list for possible purchase opportunities. Many investors also use their computers to get on my mailing list, where I inform investors of potential discounted purchase opportunities on which I am working. My contact information is in this newsletter. When you send an email or correspondence, mention “List for Discount Purchase Opportunities,” and we will include you. There is never any obligation. So, the multifamily storm is coming, but not the typical poorly located and poorly run properties will be the victims. Many managed and located properties will be on the block too soon. Make it your goal to ensure as many of these opportunities cross your desk as possible. –Darin
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